Growth in the US services sector rebounded modestly in January, though companies reported the weakest level of new business growth in more than five years, an industry report showed on Wednesday. Financial data firm Markit said the final reading of its Purchasing Managers Index for the service sector rose to 54.2 in January, up from both the preliminary read of 54.0, as well as the December read of 53.3, which had matched a 10-month low.
The January figure broke a six-month streak of waning growth, having peaked in June with a reading of 61. A reading above 50 separates expansion from contraction. The report follows a read on the manufacturing sector that showed growth holding at the slowest rate in a year's time. The new business subindex fell to 51.7, and while this was moderately stronger than the preliminary read of 51.4, it ranks as the lowest reading in the history of the Markit services sector series, which dates from October 2009. December's level was 52.9.
"Companies are clearly struggling at the moment, with the surveys recording the smallest increase in new orders seen since the financial crisis six years ago amid weaker US and global economic growth and the strong US dollar," said Chris Williamson, chief economist at Markit.
"However, the survey also found that companies remained in hiring mode, pointing to another robust non-farm payroll gain in January. At the same time, cost pressures hit a post-crisis low due to the oil price rout, which should pave the way for further falls in headline inflation in coming months." Growth in the employment subindex accelerated in January after slowing in December. Markit's composite PMI, a weighted average of its manufacturing and services indexes, edged up to 54.4 in January from 53.5 in December. The preliminary January read was 54.2.